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Massachusetts' film tax credit: Hit or bomb?

By Pete McQuaid, pmcquaid@lowellsun.com

Updated:
04/01/2013 06:35:43 AM EDT

Mickey O'Keefe, a Lowell police officer and actor, hams it up with fellow actor Jack Lally outside the Owl Diner in Lowell on Friday. The two, who were both in The Fighter, have roles in a movie being shot in the Boston area. SUN/David H. Brow

LOWELL -- Mickey O'Keefe is getting used to this film business in Massachusetts.

"It's fun. They take good care of you," said O'Keefe, the Lowell police officer who played himself in the Academy Award-nominated movie The Fighter. "But it's a long day. Once you're there, you're not going anywhere."

O'Keefe will step in front of the camera alongside The Fighter co-stars Christian Bale, Amy Adams and Jack Lally (O'Keefe's boxing-trainer friend who played Shea Neary's trainer) again for director David O. Russell in his upcoming movie about the ABSCAM scandal, scheduled for release in December.

Not much is known about the untitled project currently filming in Boston, other than that it is the latest in a line of films taking advantage of the state's tax credits for the film industry.

But the tax-credit program is coming under fire -- from Gov. Deval Patrick and others -- who say Hollywood is exploiting the situation to its own financial advantage while Massachusetts gets little in return.

The state Department of Revenue released a report March 21 that said 77 productions received $44 million in tax credits for projects shot in the state in 2011. The number was a jump from the $18.1 million given out for 2010 productions.

The report attributed the rise to the 13 feature films, including Ted and R.I.P.D., in 2011 that generated $40.2 million in credits.

Movies, television series and commercials are eligible for a 25 percent production credit if the project spends more than half its total budget or films more than half its principal photography days in Massachusetts.

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They're also eligible for a 25 percent payroll credit and a sales-tax exemption if the project spends more than $50,000 in-state.

The program has been a popular one because of the economic development the film industry brings with it. The DOR report attributed $174.6 million in new spending in 2011 to the tax incentives.

"I think we need to keep it going," said state Rep. Colleen Garry, a Dracut Democrat. "It's still showing a positive net economic impact, so it's good for Massachusetts to have these jobs and business."

Supporters of the program cite its impact on the local businesses that supplement film production, such as carpenters to build sets, caterers to provide food, and hotels to lodge out-of-state film crews.

"During my time in the Legislature, I've supported the film tax credit," said state Rep. James Arciero, a Democrat from Westford. "I had a number of people from Westford that worked on The Fighter and other films doing carpentry. To them, it was critical to have a job."

But Patrick and a leading taxpayer group are questioning whether enough money is coming back into Massachusetts.

Of the $113.3 million spent on wages in 2011, $26.8 million (24 percent) was paid to Massachusetts residents. Another $33.9 million of the $61.3 million in nonwage spending -- 55 percent -- was paid to Massachusetts-based businesses.

"There's certainly room for scrutiny, in terms of making sure taxpayers are getting the best bang for their buck," Arciero said.

Opponents point to the short shelf life of the jobs given to residents.

Andy Bagley, director of research and public affairs at the Massachusetts Taxpayers Foundation, said production companies use the tax credits to bring in the higher-paying skilled talent from out of state, leaving the lower-paying, menial, part-time jobs to residents.

"There's no permanence to any of these jobs," Bagley said. "When the movie leaves, the job's over. So you have this endless cycle of, 'Let's get another movie in here.' "

Bagley thinks the taxpayer money should be used elsewhere, such as for education.

Patrick proposed a $40 million cap for the tax credits in his proposed 2014 budget, after a year that the DOR estimates will claim more than $78.2 million in film tax credits.

"It's a total waste of money," Bagley said. "There's always this sense that we can become the Hollywood of the East, but other states have tried that, and as soon as the incentives aren't as lucrative as another state's, the movie industry moves on."

Lisa Strout, director of the Massachusetts Film Office, said the goal is to build a moviemaking culture from the ground up. She said the construction of New England Studios, scheduled to open in Devens in the summer, will create the infrastructure to sustain a full-time Bay State film industry.

"This business is pretty unique," Strout said. "It's not an industry you can start overnight. I think it really takes a decade. And the progress at Devens changes things a lot because then you can film a lot more during the winter."

O'Keefe doesn't worry about the tax-credit situation. He's just happy to work again for Russell, who personally called him to have him audition for the role of an "FBI guy." That's all the detail he's allowed to divulge regarding the film, and as far as there being more films in his future, even he isn't sure.

"I've got other things going on," O'Keefe said. "I'm going to be retiring, which has been coming -- it's time. So I'll just go with the flow, take it one day at a time and see what happens."

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